As predicted the Bank of Canada will keep rates low for the foreseeable future. This is true as well for a

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This policy combined with the (apparently) slowing demand in the residential real estate market will create an excellent buying opportunity for those wanting to own their homes. According to the bank the wild card in their policy choice is the US economic recovery which is well documented by the US real market blogger, Calculated Risk.
The real problem for the BoC is they are caught between a high dollar, export demand and imports such that they are dammed if they do or dammed if they don’t.
If they raise rates, especially increasing the differential between US rates and Canadian rates then there will be a rise in the Canadian dollar vs the US dollar which will damaging Canada’s vital export industries. In addition, as the dollar rises, imports become cheaper. Much of Canada ‘s inflation basket is made up from imported goods so the inflation number goes down, which pushes the need to raise rates back down.

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Confused? Well the bank is a bit too. And we haven’t even factored in the tight mortgage lending policies that the Finance Department and OFSI have forced on lenders that are causing a major slowdown in the construction industry in Canada. Residential construction is a major economic driver for the Canadian economy and its loss will put further downward pressure on any plan to raise interest rates. To bring this into focus for the ordinary homeowner, all that this means is there is little push on the BoC to raise rates ahead of any move by the Feds in the US. They have committed to keep rates where they are until 2014. So despite the few disclaimers in the BoC’s policy statement, the truth is rates are going nowhere in the foreseeable future and if things don’t get going in the near term, we may even see a rate cut.